How Uygur and North Korea human rights activists can join forces to keep slave-made goods out of your closet
How many things do you own that were made by slaves—specifically, enslaved North Koreans or Uygurs? The bad news is that no one knows, because most of the evidence is hidden deep within the supply chains. The good news is that this may be changing just enough to make the use of slave labor unprofitable for the retailers you buy from and the sweatshops in China that employ it.
“Royal Blood-Fresh”
Chinese manufacturers have a long history of sourcing their goods from North Korean state-owned sweatshops that sew “Made in China” tags onto the wares. It’s up to 75 percent cheaper for Chinese manufacturers to use North Korean labor.
“North Korean workers can produce 30 percent more clothes each day than a Chinese worker,” said the Korean-Chinese businessman.
“In North Korea, factory workers can’t just go to the toilet whenever they feel like, otherwise they think it slows down the whole assembly line.”
“They aren’t like Chinese factory workers who just work for the money. North Koreans have a different attitude — they believe they are working for their country, for their leader.” [Reuters]
According to the Financial Times, the use of North Korean labor in Dandong is long-established and extensive. Of course, we expect this kind of class exploitation and enslavement of the proletariat from … the Chinese Communist Party and the Workers’ Party of Korea. It’s more disappointing when a self-described progressive democracy does it. While the Kaesong Industrial Complex was operating, North Korean labor and components manufactured there were probably leaking into U.S. commerce with “Made in Korea” labels. If you’re tempted to defend the labor practices at Kaesong and haven’t yet read Marcus Noland’s 2014 paper, “See No Evil: South Korean Labor Practices in North Korea,” you should probably do that now. Before 2011, various people imported women’s garments, motorcycle helmet linings, and other items from North Korea, most of them probably as via Kaesong. In 2006, Ikea imported quilts and pillows made with fabric from “Pakistan, India, China, or North Korea.” At the time, this was all perfectly legal, which may be the reason some of South Korea’s least ethical investors recently spent nearly a million dollars on lobbyists on a campaign to convince Congress to relax U.S. sanctions and reopen Kaesong.
Then there was the curious case of one Sean Kim of Torrance, California, who imported North Korean dietary supplements—which is terrifying if you know anything about North Korea’s reputation for medical quackery. Even more terrifying is the supplement’s name: “Royal Blood-Fresh.” Pugang claimed that Royal Blood-Fresh was a preventive for deep-vein thrombosis. Shockingly, at least one doctor dismissed that claim as non-scientific.
According to the Washington Post, the North Korean manufacturer of Royal Blood-Fresh, Pugang Pharmaceutic Co. Ltd., is a part of the North Korean conglomerate she described as “Pugang Corporation.” In 2005, the Treasury Department designated and froze the assets of a company called Korea Pugang Trading Company for being a subsidiary of Korea Ryonbyong Trading Company, which was involved in (wait for it) the proliferation of weapons of mass destruction. In 2007, Customs missed that connection and let Mr. Kim’s supplements in despite the blocking order. In 2015, Pugang’s head even sat for an interview with a Washington Post reporter and openly confessed to conspiracy to commit money laundering to evade the blocking action. According the Post, Pugang was selling the supplements with the marking “Made in Korea,” but the 2007 Customs ruling indicates that they were marked “Made in DPR Korea,” which would have been understood by all of twelve American consumers. Pugang also sold its products to South Koreans. In 2017, three Russians were arrested for smuggling them into Busan without government approval.
So, in what universe did anyone think Royal Blood-Fresh was a good idea?
2011-2017: The Legal Landscape Changes
In 2011, President Obama signed Executive Order 13,570, which banned all imports of goods, services, and technology from North Korea. Then, in August of 2017, President Trump signed (or was forced to sign, because it had passed by a veto-proof margin) the Countering America’s Adversaries Through Sanctions Act of 2017. Section 321 of the CAATSA created a rebuttable presumption that any goods “mined, produced, or manufactured wholly or in part by the labor of North Korean nationals or citizens” are the products of forced labor, and therefore excluded from U.S. commerce under a longstanding provision of the Tariff Act, at 19 U.S.C. 1307 (you’re welcome, humanity). The presumption can only be overcome by clear and convincing evidence[1] that the products are not, in fact, made with forced labor. Let the engagers among you take note—were Pyongyang ever to allow its workers to keep their own wages and work under fair and humane conditions, the importer could, hypothetically, have overcome that presumption.
In October of 2017, just two months after the CAATSA became law, Kevin McAleenan, the nominee to be Commissioner of U.S. Customs and Border Protection, testified at his confirmation hearing that CBP had used CAATSA 321 to stop stop six shipments of Chinese seafood made with North Korean labor. In a set of Questions For the Record CBP returned to the Committee later, CBP claimed to have stopped eleven shipments, valued at $564,775. (As OFK readers know, it’s highly likely that the seafood was actually caught by Chinese ships in North Korean waters; in case you were also wondering, McAleenan didn’t say whether the seafood was canned, frozen, or … fresh.) CBP says it meets regularly with civil society organizations “to ensure we are aware of trends, insights, and concerns that these groups possess into forced labor issues.” As we’ll see, it also makes good use of OSINT from press reports. CBP took its new legal obligations seriously. The rebuttable presumption cleared the fog that hides Chinese sweatshops’ enslavement of North Koreans, and changed the game on how North Korean-made imports are treated.[2]
2021: The Case of Poof Apparel
In Resolution 2397, the UN Security Council stated that Pyongyang’s exports of textiles and seafood contribute revenue to its WMD programs. In December 2020, a retailer called Poof Apparel tried to bring in two shipments of women’s and girl’s clothing from China. Poof sourced the clothing from a manufacturer called Dandong Huayang Textiles and Garments Co., Ltd. For those of you who don’t follow North Korea news closely, Dandong is a Chinese port very close to North Korea, which has a long history of sanctions-busting, money laundering, maritime smuggling, and (as we’ll soon see) forced labor involving North Korea. CBP stopped the shipment at the Port of Newark on suspicion that it was made with North Korean labor.
(That’s probably also true of Dandong.)
The intelligence units in CBP’s Office of Trade had done their homework on which Chinese manufacturers use North Korean labor. CBP notified Poof of its exclusion decision and told Poof that if it wanted its shipment to clear customs, it would have to answer a list of questions and provide “documentation detailing how Dandong Huayang employees are recruited, identification cards and payroll records or other proof of payment.” Poof protested that the goods were made with Chinese labor, not North Korean labor, and appealed the ruling.
Via The Guardian
The appeal did not go well for Poof, however. CBP noted several discrepancies in Poof’s documentation that fell short of “clear and convincing.” Poof submitted the report of an outside auditor on Dandong Huayang’s labor practices, claiming that Dandong Huayang only used native-speaking Chinese laborers, but CBP noticed discrepancies in the date of the report, and that the auditor was only allowed to inspect certain parts of Dandong Huayang’s sprawling, massive factory grounds. The photocopies of the workers’ identity documents were illegible. The auditor only interviewed ten out of 49 workers (as Noland’s report about Kaesong confirms, North Korean minders don’t allow nonbelievers to talk to their charges). And now we come to the part where a sharp-eyed CBP attorney noticed something in Poof’s appeal exhibits:
The WRAP report also included photographs of the Dandong Huayang production facility that are date-stamped November 3, 2020. Although the photographs are slightly blurry, one particular photograph stood out from the rest. The photograph labeled “Production process: Packing” depicts Dandong Huayang workers next to a stack of boxes of personal protective equipment (PPE), specifically disposable clothing.
These boxes of PPE are identical to images of PPE boxes featured in The Guardian’s November 2020 exposé of North Korean forced labor used in Dandong Province factories in the production of PPE coveralls. The three-month investigation found evidence that protective coveralls ordered for the UK Department of Health and Social Care (DHSC) originated from Dandong factories, including Dandong Huayang, using North Korean forced labor. The exposé further revealed that the PPE has been exported to the United States, Italy, Germany, South Africa, Japan, South Korea, the Philippines, and Myanmar.
Accordingly, the photograph does not establish with clear and convincing evidence that the excluded garments were not made with forced labor, rather it establishes that it is highly likely the workers that were making the subject excluded garments were also making the disposable PPE garments and therefore, likely were North Korean nationals. [CBP Ruling, Mar. 5, 2021]
CBP denied the appeal on CAATSA Section 321 grounds. It later issued a press release on the ruling. Dandong Huayang’s website still advertises its PPE. This brings us to two other North Korean forced labor scandals involving Dandong Huayang, starting with The Guardian’s exposé:
It is claimed that the North Korean workers in Dandong, who are mostly women, work for up to 18 hours a day, with little or no time off. They are under constant surveillance and are unable to freely leave the factories.
Sources indicate that the North Korean workers in PPE factories in Dandong have about 70% of their wages seized by the North Korean state.
“The workers have no days off. They are not allowed to go out. The North Korean [state] controls them. They make money for the country,” said a manager at one factory. [The Guardian]
State-Sponsored Slavery
Dandong Huayang denied using North Korean labor, but there is plenty of evidence that it does. Our friend, Remco Breuker, even found an interview in which a Dandong Huayang manager boasts about all the money his company made by using it to make goods to export to the United States. According to Panjiva documents I found online, different Dandong Huayang subsidiaries source more than 80 percent or more than 90 percent of their shipments from North Korea (see also). Dandong Huayang mainly exports to the United States and Canada, and ships some of its wares through Busan, South Korea. This was not the last scandal for one of Dandong Huayang’s buyers, either. In November 2021, the Canadian retailer Reitmans pulled consignments of women’s clothing from its shelves and severed its relations with Dandong Huayang after a CBC report found that it had purchased more than 100 shipments from Dandong Huayang that may have been made with North Korean forced labor.
Beyond the reputational risks, the manufacturers, exporters, and importers also face legal risks. Not only does this trade violate UN Security Council resolutions that ban North Korean textile exports, but also of our country-of-origin labeling laws and Executive Order 13570, violations of which are punishable by up to twenty years in Allenwood, plus fines, penalties, and forfeitures. (CBP has its own administrative forfeiture authority.)
Breuker’s report documents the use of North Korean labor in Dandong’s sweatshops extensively. Mining Chinese customs data, he finds that starting in 2010, the number of North Korean visits to China for “worker and crew” reasons began to rise sharply. Between 2008 and 2015, the number of such recorded visits almost doubled. Another suspicious fact is that a high percentage of those North Koreans were women—who are most likely to be sent to work in Chinese canneries and sweatshops, and North Korean restaurants. North Korean officials are frequent visitors to those factories, to negotiate the arrangements. Provincial statistics show that these “cross-border production networks” may have exported hundreds of millions of dollars’ worth of goods to the United States since 2015. That boom came just in time to buffer the effects of the closure of Kaesong in 2016.
After the UN Security Council—including China—voted unanimously to ban North Korean labor and textile exports, most of the factory managers in Dandong surveyed said, “Meh.” That’s probably because, according to Breuker’s paper, Chinese authorities had encouraged factories in Dandong to use North Korean labor to boost export earnings. The fact that the Port of Dandong was deeply in debt was probably also a consideration. So was their longstanding pattern of sanctions evasion to bail Kim Jong-un out. In other words, this commerce is unquestionably state sanctioned, on both sides of the border. (You can follow Remco on Twitter here.)
The Uygur Connection
The result of this is that corporate lawyers are now warning their clients that they face greater legal, financial, and reputational risks than ever if they use North Korean labor. This corporate consulting firm that helps companies avoid the taint of human rights abuses is also warning of the risk from North Korean labor. Up until 2017, our enforcement against North Korean imports clearly hadn’t been enough to change the behavior of the sweatshops and canneries. In fact, the laws didn’t even prohibit most of that trade. That has begun to change, and the rebuttable presumption provision that first appeared in the CAATSA, and which CBP seems to be taking seriously, is an important part of that.
All of this will soon be true of Uygur labor, too. A provision patterned on Section 321 has since found its way into Section 3 of the Uyghur Forced Labor Prevention Act, which is a glorious thing. C4ADS has done characteristically excellent work investigating the supply chains for Uygur forced labor. Just as Uygur human rights activists have learned legal and legislative lessons from North Korean human rights activists, North Korean human rights activists can learn from how Uygur human rights activists trace supply chains to Uygur forced labor. Both can learn to combine their research with CBP’s petition process at 19 C.F.R. § 12.42, to effectively blacklist Chinese manufacturers that are known to use North Korean labor, and to ask CBP to apply enhanced NKSPEA 205 inspections to seafood and textiles from Dandong, except for those that have allowed transparent inspection of their work forces.
The new law is likely to target cotton textiles made with Uygur slave labor. It would not surprise me in the least if the same Chinese sweatshops that use enslaved North Koreans also use cotton grown by enslaved Uygurs. Another area worthy of investigation by abolitionists may be wigs and false eyelashes, given reports that both are made in this North Korean prison camp for export, and the revelation that Elf Cosmetics was penalized for selling false eyelashes sourced from North Korea.
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[1] According to CBP’s ruling, “[c]lear and convincing evidence is a higher standard of proof than a preponderance of the evidence, and generally means that a claim or contention is highly probable.”
[2] Separately, the National Oceanic and Atmospheric Administration (NOAA) has also warned importers about the forced labor risks associated with North Korean fisheries and labor.